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Lululemon Case

In: Business and Management

Submitted By samanthaquinn
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-Day came in at the end of a recession and needed to build a billion dollar company despite many challenges. Especially with new professionals coming in and not making relationships with other employees hurt the company there were more issues than she had thought there would be.
-mismanagement of the real estate strategy had resulted in high-cost locations in many of the new U.S. markets with little to no demand. Moreover, poorly supervised construction at many sites caused escalating costs and quality concerns.

-struggled with new inventory systems with demands of expanding marketplace
-less teamwork causing organization to slow down

Chapter 2: History
Chip Wilson, founder began taking yoga and discovered ill-produced material made for sweaty power yoga of cotton and sought to fill that need.

-Investors loved the vertical, top down integration and wanted lulu to keep their little cult culture while giving them more infrastructure.
-Risk of going into the states did lulu have capability to go into the states
-Former Reebok CEO (Bob) came to go into the US market with high success

3. Value Prop
-The company has developed a unique approach to selling athletic apparel, downplaying its role as retailer and defining its mission as creating “components for people to live longer, healthier, more fun lives.” In fact, company officials say that the job of store employees is actually not to sell clothes.
-Groove pants most popular

4. Culture
-importna to include integrity, work/life balance and having fun.
-Lots of training goes into employees $3.76 million.
While skills-based training is an essential part of the program, the emphasis falls on teaching personal accountability, helping employees set goals, and inculcating them in the company culture.
- When employees reach one year of service, lululemon sponsors their attendance at a three-day session offered by Landmark Education
-Positive manifesto
-employees do a hedgehog exercise to teach & help employees, pus employees to create life and a vision for their life

CHAPTER 5. One Store, One Hundred Times
-store manager is key person in the organization. Lulu managers have more decision rights then regular retail places.
-restructured compensation to take risks and make decisions but also with risks – they have investment in the outcome
-80% base and 20% commission

CHAPTER 6. Growing Pains
-Bob, former CEO of reebok brought in outsiders that caused some issues

LULULEMON’s Strategy

Staging & Pacing:
-grown in terms of volume, geographic coverage and sales.
-want to go towards Australia and China and more in the US.

Arenas: Canada and the US
-Vertical: Design, Manufacturing
-Geography: US with 50 and Canada with 50
-Older but want to look younger
-Yoga Clothing/Yoga Inspired (Golf, Tennis, Running)

Differentiation: Vertical Retail Model, Training in employees (educators), they create a lifestyle, Good quality and details in the environment
-Proprietary fabrics (Luon)
-Prestige Image
-Fit & Function instead of fashion
-High Quality

Economic Logic:
-Very high price
-High turnover

-Organic growth

VALUES: 1) Quality 2) Product 3) Integrity 4) Balance 5) Entrepreneurship 6) Greatness 7) Fun

DESIGN: 4 & 3
RETAIL: 4 5 3

Positives and negatives of having a vertical integration:
-Need capabilities in all stages
-Have to be fully coordinated
-Can’t necessarily lower cost
-Control retailing (what/where/what price)
-Control selling point (know what happens)
-Control of the supply chain

HUMAN aspect:
-compare against manifesto and values
-personal development goals sharing
-more advanced in personal development
-demonstration that these values matter (top management team working on the floor)

Incentive compensation, Design, Local Connections
-Support from Lulu Regular manager gives them advice They are given the best practices but then if they have a better idea they can implement it Mistakes hurt them but also the brand

MARKET DEVELOPMENT 1) Attractor/ Influencer (Opinion Leader) 2) Showrooms a. Products limited b. yoga/community c. “ambassadors” 3) Open store in new hip area 4) Open stores in suburbs * Integrathing themselves into the community is brilliant idea/strategy *

-Can some of bob’s people
-Close bad stores
-hiring people that don’t fit into the culture

-Cross functional coordination
-get back to market development
-put in systems
-implement e-commerce systems to reach the 1 billion $.
-Top management team demonstrate values

-continue store practices
-continue screening

OBJECTIVES: 1) Define strategy 2) Recognize importance of culture to C.A. 3) Consider role of culture a a control mechanism 4) Challenges of growing business while maining culture 5) What is the sustainable model

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